Today I want to continue talking on the most recent trend in Japanese yen pairs, basically that of gbp/jpy. If you remember I told you yesterday that I expected a downtrend in usd/jpy and gbp/jpy to be finished due to the fashion in which the pairs reversed yesterday. And I was absolutely right. Extreme moves and extreme reversals that happen on the same day usually show the end of a trend. That’s exactly what happened yesterday. And the pairs did reverse their downtrend. Gbp/jpy gained back 1000 pips in two days. Wow! What is going to happen now?
According to my experience the pairs will establish a top and a bottom. Once these two are in place they will start ranging. I expected gbp/jpy to stop at around 131.00 level, but it moved beyond that and was stopped at 132.50 mark. I think it will be top for now. I do not expect the pair to go beyond 133.00 as I see pretty strong resistance there. It used to be strong support. Now, I guess, according to classical support and resistance rules it is going to be a pretty strong resistance. My experience tells me that gbp/jpy can fluctuate between 133.00 and 130.00 levels for a couple of days and then go down to confirm a bottom which will most probably be at 122.50 level. So, I am more in a selling mood at the moment. Of course, the things I am telling you are not recommendations, so be careful as trading financial markets is a pretty risky business.
My previous posts:
Trend after a breakout
Trend trading
Disclaimer
Trading financial markets carries a high level of risk, and may not be suitable for all investors. All information on the blog is of educational nature and cannot be considered as advice, recommendation or signals to trade in any financial markets.
